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Q: "I
am trying to establish a royalty step-down clause for a very successful text.
I proposed the three-edition stepdown of 75 percent of contractual royalty
to 50 percent to 25 percent, assuming this means, for example,
when I do not participate at all, I would receive 75 percent of,
say, 15 percent, then 50 percent of 15 percent then 25 percent of 15
percent. Is that correct?
My publisher astounded
me by saying this means 75 percent of the full royalty, contractual
rate, then 50 percent of the new, reduced, rate, and 25 percent of the
latter vastly reduced rate!! Doesn't this depart from common industry
practice? It is my understanding from TAA discussions and other
sources that the standard stepdown is 50 percent of contractual
rate, then 25 percent of the same contractual rate, followed by
nothing. What's up??"
A: Zick
Rubin The Law Office of Zick Rubin, Publishing / Copyright
/ Trademark:
"This is a very
important item. Here is a formula that is sometimes proposed by
authors and that is sometimes acceptable to publishers for a successful textbook:
75 percent of the royalties (i.e., the contractual rate) in the first edition
in which the author does not take part, 50 percent of the royalties
for the second such edition, and 25 percent of the royalties
for the third and subsequent such editions.
This can be an
actively negotiated item on both sides. The negotiations reflect
a number of factors, including: how successful and established is the
book?; how valuable will it be for the publisher to continue listing
the original author as 'author'?; what would be fair and attractive
royalties to attract an excellent new author or authors to take over
the book? (the publisher will typically be reluctant to expand
the total royalty pot); will the initial author play any continuing
role as a consultant or in marketing?
You're not crazy. When
these step-downs (whether 50-25 or any other formula), we mean what
you think it means: ___% of the original contractual rate for Revision
1, ___% of the original contractual rate for Revision 2, etc. Is
your publisher saying that it would agree to 75 percent for Revision
1, then 50 percent of 75 percent (or 37.5 percent) for Revision
2, and then 25 percent of 37.5 percent (or 9.375 percent) for Revision
3? That's a peculiar way to go about it, but the actual numbers are
quite good."
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